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STATE OF THE UNION WITH CANDY CROWLEY

Interview With Mitch McConnell; Interview With Steny Hoyer

Aired July 18, 2010 - 09:00   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.


CANDY CROWLEY, HOST: The president blisters Republicans for blocking an extension of unemployment benefits. A weekend blast, wrapped around his election year message.

(BEGIN VIDEO CLIP)

PRESIDENT BARACK OBAMA: We can't afford to go back to the same misguided policies that led us into this mess. We need to move forward with the policies that are leading us out of this mess.

(END VIDEO CLIP)

CROWLEY: The Senate GOP leader holds firm that the extension on jobless benefits be paid for, a position reflecting Republican belief that standing against big government and big spending is the ticket back to power.

(BEGIN VIDEO CLIP)

MCCONNELL: We broke out of the Washington echo chamber and fought the government-driven solutions the Democrats were proposing. In short, you might say we got our groove back.

(END VIDEO CLIP)

CROWLEY: The unemployment package is expected to pass this week over Republican objections. As for the November elections? Game on.

(BEGIN VIDEOTAPE)

CROWLEY (voice-over): Today, the battle for control of Congress, with Senate Republican leader, Mitch McConnell.

MCCONNELL: When your entire pitch to the American people is that the government will solve your problems, people get upset when government can't deliver.

CROWLEY: And House Democratic Leader Steny Hoyer.

HOYER: Republican leadership during the last decade bought a lot of things, tax cuts, wars, drug prescription programs -- not a bad program, but they didn't pay for it.

CROWLEY: Then the Gulf Coast after the oil stops gushing, with New Orleans Mayor Mitch Landrieu. I'm Candy Crowley, and this is STATE OF THE UNION.

(END VIDEOTAPE)

CROWLEY: Though they don't like to hear it out loud, most Democrats admit that politics are tough for them this year, but as much as the terrain favors Republicans, it's no picnic out there for them either.

A recent "Washington Post/ABC News" poll asked how much confidence do you have in Obama, Democrats or Republicans to make the right decision for the country's future? President Obama still generates confidence. Republicans came in last, with just 26 percent saying they have a great deal or a good deal of confidence in Republicans.

Here with me now to discuss politics, jobless benefits and the Republican's groove is Senator Mitch McConnell. Thank you so much for being here.

MCCONNELL: Glad to be here, Candy.

CROWLEY: I want to play a little bit more about what the president had to say yesterday when he really was slamming Republicans for standing in the way of this extension of unemployment benefits. Take a listen.

(BEGIN VIDEO CLIP)

OBAMA: They say we shouldn't provide unemployment insurance because it costs money, so after years of championing policies that turned a record surplus into a massive deficit, including a tax cut for the wealthiest Americans, they finally decided to make their stand on the backs of the unemployed.

(END VIDEO CLIP)

CROWLEY: Look, we're talking about $34 billion to extend unemployment to the long term unemployed, to give them more weeks of unemployment benefits. Doesn't he have a point? I mean, why in the world would you choose to take this down? I mean, the deficit's a trillion dollars this year, so for $34 billion that's going to help people with no jobs, you all are standing in the way of it.

MCCONNELL: Well, the budget is over a trillion dollars, too, and somewhere in the course of spending a trillion dollars, we ought to be able to find enough to pay for a program for the unemployed. We're -- we're all for extending unemployment insurance. The question is when are we going to get serious, Candy, about the debt?

We recently passed a $13 trillion cumulative deficit threshold. When are we going to get serious about this? This administration has been on an incredible spending spree.

CROWLEY: I get that point and I understand what you're saying and I think the American people are concerned about the deficit spending. But you all -- when Republicans were in charge six of the eight years that President Bush was here, you were Majority Leader at times during that, you spent on a prescription drug bill that was not paid for that is far more expensive than this unemployment bill is. You had two wars, ongoing wars that were not paid for.

So for you now to stand up and say, well, we're for balancing the budget, and, by the way, you've got to pay for these unemployment benefits, it just seems dissonant to the trials of the American people, particularly those without jobs.

MCCONNELL: Well, let's put it in perspective. The last year of the Bush administration, the deficit as a percentage of gross domestic product was 3.2 percent, well within the range of what most economists think is manageable. A year and a half later, it's almost 10 percent. You know, how many --

CROWLEY: But you can object then --

MCCONNELL: -- how long can we -- how long can the other side run against the previous administration? They've been in charge now for a year and a half. They've been on a gargantuan spending spree. They've taken, as I said, the deficit as a percentage of GDP from 3.2 percent to almost 10 percent in a year and a half.

Look, at what point do we pivot and start being concerned about our children and our grandchildren? There is no way in the world on a trillion dollar budget this year we can't find the money to pay for an extension of unemployment insurance, something we're in favor of.

CROWLEY: But part of that $13 trillion came during a Republican administration for eight years, and I guess the question is that you now are asking the public to bring back a Republican Senate or a Republican House. How can they trust you if three years ago you all were deficit spending, and now you go, well, we're for -- we want to stop. We want to have -- pay as you go?

MCCONNELL: Well, the issue is not whether the public thought Republicans spent more than they should have. The issue is when do we stop doing this?

CROWLEY: Did you spend more than you should have as Republicans?

MCCONNELL: Look, if you put it in comparison, as I just pointed out, we've been on a gargantuan spending spree for the last year and a half, far more than any deficits that were run up in the early part of the decade. This is -- this is a serious matter. At what point do we pivot and do something about this? And we think if you can't pay for a program that everybody agrees we ought to extend, what are we going to pay for?

If we can't pay for a program like extension of unemployment insurance that virtually every member of the Senate -- I think, in fact, every member of the Senate wants to extend, then what are we going to pay for? When do we start?

CROWLEY: Let me ask you, along the same lines. I want you to listen to something that Alan Greenspan, former head of the Fed, had to say earlier this week.

(BEGIN VIDEO CLIP)

ALAN GREENSPAN, FORMER CHAIRMAN OF THE FEDERAL RESERVE: They should follow the law and let them lapse.

(UNKNOWN): Meaning, what happens?

GREENSPAN: Taxes go up. The problem is unless we start to come to grips with this long-term outlook, we're going to have major problems.

(END VIDEO CLIP) CROWLEY: It's Alan Greenspan, talking about allowing the Bush tax cuts to expire in January. Now, this is a man that supported the Bush tax cuts.

MCCONNELL: Right.

CROWLEY: What do you think?

MCCONNELL: Well, the issue is whether we're going to raise taxes. This is current tax law, and what they're saying is we ought to raise taxes in the middle of a very, very difficult economic environment. I don't think it's a good idea to raise taxes in a middle of an, of a situation like we face today. So we're not talking about extending tax cuts. We're talking about raising taxes.

And then, Candy, they will come back and say, oh, we're only talking about raising taxes on the top income earners. Well, if you do that, you will capture the income of 50 percent of small businesses in this country, the ones right now who are not expanding and hiring.

CROWLEY: I don't know many economists who look at this deficit and don't say you have to do two things here, have you to raise taxes and you have to cut spending. How can the Republicans argue that it is time to get serious about the deficit and let -- and yet argue that these tax cuts should be allowed to stay in place?

It just seems not to make sense. It seems like you're arguing both sides, that -- that you don't want to give benefits to the unemployed until they're paid for, but, by the way, you want to keep the tax cuts in place for people who are quite wealthy, some of them, you know? So it just seems like you're arguing both things here.

MCCONNELL: Well we -- we believe the problem is not that we tax too little, but that we spend too much, and we've had this rate for taxes now for almost a decade. The question is not cutting taxes. The question is raising taxes. What they're trying to do, Candy, is to argue that at this juncture, with this kind of economic environment, we ought to have a significant tax increase. I don't know the economists you're talking to, but the ones I'm talking to are saying raising taxes in the middle of a recession is not a good idea.

CROWLEY: OK, overall, though, a $13 trillion deficit, do you think there is a way to bring down and get rid of a $13 trillion debt without raising taxes? MCCONNELL: I think that we have a serious problem here because we spend too much. I think we ought to concentrate on the spending side. I've on fact been encouraged by the comments of Erskine Bowles, who's one of the chairmen of the president's Deficit Reduction Commission, a Democrat, who's saying that he thinks two-thirds or three-fourths of the problem is a spending problem. So that's where we ought to --

CROWLEY: (INAUDIBLE) --

MCCONNELL: That's where we ought to start.

CROWLEY: OK, could -- but could you say, categorically, that you would never support a tax increase?

MCCONNELL: I can say categorically that I don't think it's a good idea to raise taxes in the middle of a recession, and that is exactly what will happen if they let the Bush tax rates expire at the end of this year.

CROWLEY: Let me try this one -- one more time, and that is, do you see -- absent a recession, do you see a time when you're going to have to raise taxes in order to get rid of a $13 trillion debt?

MCCONNELL: Well, you can't say absent a recession. We're in the middle of a major economic slowdown.

CROWLEY: Oh, the recession wouldn't always be here.

MCCONNELL: The issue is what are we going to do now in the middle of this economic slowdown? I think raising taxes is a terrible idea, and the economists I talk to believe that it's a terrible idea.

CROWLEY: I'm going to call that a maybe.

We'll be right back. Up next, is there anything on the Democrats' to do list that the Republicans will give them a hand on?

(COMMERCIAL BREAK)

CROWLEY: Joining me once again, Senate Minority Leader Mitch McConnell.

Thanks, again, for being here. Very famous quote from you this week that the Republicans have their groove back, but when only 26 percent of Americans say that they believe Republicans would do the right thing for the country, it seems to me that you have a little more grooving to do before you get back in sync with the American public.

MCCONNELL: Well, a more important question than that one -- I don't think the public has a lot of confidence in anybody right now. A more important question than that one is what is called the party generic ballot question. And we had a consistent dead even or ahead position in the party generic ballot question for some months. Candidates are either competitive or ahead in 11 different states now where there are Democratic incumbent senators. The environment is very good for a good year. You still have to actually win the races.

CROWLEY: You do. How many do you think you might pick up?

MCCONNELL: You know I'm not going to answer that question. I think if the election were today, we would have a good day. We'd be in a better position...

CROWLEY: How do you define good?

MCCONNELL: I'd like to be in better shape than the 41 that we have now. And I think the chances of that are pretty good.

CROWLEY: One of the things that the Democrats have painted Republicans as, and it seems to have stuck, is the whole idea of the "party of no," that all you all do is oppose things. I wanted to read to you something that Senator Dick Durbin, who is the assistant Democratic leader, said to Roll Call this week. "Senator McConnell has told Senator Reid, forget it, we're not going to do anything. Other Republican senators have said, we're just not going to give you anything."

So, A, did you say that? But, B, if that is your attitude, then aren't you the "party of no"?

MCCONNELL: Look, what we are proud to say no to, and I think what the public wants us to say no to are things like the government running banks, insurance companies, car companies, nationalizing the student loan business, taking over our health care.

They've just passed, in my view, a terrible financial services bill, supported, interestingly enough, by Wall Street and opposed by community bankers. It's going to require the issuance of 370 new regulations.

We have had an explosion of hiring of federal employees with borrowed money. They have got people over at the FCC trying to regulate the Internet. People over at the NLRB trying to get rid of the secret ballot in labor union elections by regulation. Look, Candy...

CROWLEY: But is being opposed to all of these things enough to get people for you?

MCCONNELL: Yes, we are opposed -- let me make it clear, we are absolutely opposed to all of those things, and proudly so.

There are some things the president is trying to do that we support. We support his efforts in Afghanistan, I think he is on the right track there. I think he continued the policy successfully in Iraq. He says he is for trade deals, where are they? We would like to help him pass them.

He says he is for nuclear power. What is he prepared to do on that? We are for that. He says he is for clean coal technology, we haven't seen any evidence any action on that, but we are for that. So the question is, what are you saying no to? We will proudly say no to the litany of things that I just mentioned a few minutes ago.

CROWLEY: The majority leader has said that he would like to see an energy bill this year. The president wants to see an immigration bill. Any of those things going to happen?

MCCONNELL: Well, it could well be possible that we would do something with regards to the oil spill. Although I must say, this is mainly a failure of the administration. BP caused the spill. It is BP's responsibility to plug the leak. The federal government is in charge of trying to keep that oil off of the shores of the United States.

It took the administration 70 days to order skimmers down to the Gulf.

CROWLEY: In terms, though, of...

MCCONNELL: You can't -- my point is, you can't legislate competence. I think it's -- you know, we are happy to look at oil spill legislation, for example. Do we have the right kind of commission in place to look at what happened? There are aspects of that that might require legislation. But this has mainly been a competence problem on the part of the administration in keeping the oil off of our shores. CROWLEY: How about an overall energy bill, though, cap and trade? Some more investment in alternative energy? I mean, a big comprehensive energy bill, a big comprehensive immigration bill, do you see that -- truly, do you see either one of those things happening this year?

MCCONNELL: A comprehensive energy bill, if it includes cap and trade, you mean a national energy tax. I mean, just think of this, you pick up your bill and you have got a new line on there for a national energy tax. I don't think any of my members are going to be prepared to...

CROWLEY: Well, it's opposing charging companies.

MCCONNELL: Oh, but that will be passed on to the consumers. It is a national energy tax. Seizing on the spill in the Gulf to try to pass a national energy tax strikes me as one more example of what the president's chief of staff said famously early on in the administration, "a crisis is a terrible thing to waste."

In other words, you have you a crisis over here and you try to use that as an excuse to pass a piece of legislation over here.

CROWLEY: Do you even want an energy bill or an immigration bill this year?

MCCONNELL: Energy, I think there are some things we could do. I mentioned them. I mean, we're interested in nuclear power, clean coal technology. I think there are things in the energy area we could and should do. What I am not interested in doing is using the oil spill as an excuse to pass a national energy tax.

CROWLEY: Do you think that there are racist elements in the tea party?

MCCONNELL: Oh my goodness, in the whole country, is there racism?

CROWLEY: Well, as you know, this weekend, NAACP said that the tea -- there are racist elements in the tea party.

MCCONNELL: I am not interested in getting into that debate. What we are interested in is trying to have an election this fall that will respond to what the American people are asking us to do, which is to have some checks and balances here.

They have seen big government on full display for a year-and-a- half. They are appalled. They would like for it to stop. And the best way for it to stop is to have a mid-course correction, which is not unusual in American politics, and I am hoping that is what is coming this fall.

CROWLEY: Nothing that you have seen on TV, including some of the signs that we've seen, albeit the minority at some of these tea party rallies, some of the posters that have been put up in the name of some factions of the tea party make you the least bit uncomfortable? MCCONNELL: Look, there are all kinds of things going on in America that make me uncomfortable, both on the right and on the left. I have got better things to do than to wade in to all of these disputes and discussions that are going on out in the country. What we are trying to do is to make the president a born again moderate. We are trying to send enough conservatives to Congress this November to move him in a different direction.

CROWLEY: Senate Republican leader Mitch McConnell, thank you so much for your time, I appreciate it.

MCCONNELL: Thank you, Candy.

CROWLEY: When we come back, despite some big legislative wins for President Obama, House Democrats may see their majority trimmed in November. We'll ask House Majority Leader Steny Hoyer why that is.

(COMMERCIAL BREAK)

CROWLEY: You have no trouble knowing when Nancy Pelosi is unhappy.

(BEGIN VIDEO CLIP)

PELOSI: I don't see a problem. I think the comment was unfortunate.

(END VIDEO CLIP)

CROWLEY: What made her unhappy was that Robert Gibbs stated the obvious, that she could lose her job as House speaker. (BEGIN VIDEO CLIP)

GIBBS: I think there's no doubt there are enough seats in play that could cause Republicans to gain control. There's no doubt about that.

(END VIDEO CLIP)

(BEGIN VIDEO CLIP)

PELOSI: Nothing is different because of any comment that was made. There is absolutely no reason to think that the White House has been anything but cooperative with us, in terms of our political efforts to retain control of the Congress. The comment can be interpreted many ways. I think it was a Rorschach test.

(END VIDEO CLIP)

CROWLEY: The Rorschach test looks like this. Democrats see the House of Representatives as it is now, more blue than red. Republicans see it more red than blue.

A recent CBS/New York Times poll shows only 19 percent approve of the job the Democratically-led Congress is doing. And even scarier for Democrats, 49 percent of voters say they'll vote Republican, compared to 45 percent for Democrats. Up next, we'll ask Democratic leader Steny Hoyer why.

(COMMERCIAL BREAK)

CROWLEY: Joining me now is the majority leader in the House of Representatives, Democratic Congressman Steny Hoyer of my home state of Maryland.

Thank you for joining us.

HOYER: Good to be with you, Candy.

CROWLEY: Well, we, sort of, laid out that this is a pretty tough year for Democrats. Can you give me some sense -- we know you had a meeting with the president. We've heard some of your colleagues speak out loud about the tensions that exist. It just seems to me a high anxiety time for Democrats.

HOYER: Well, I think it's a high anxiety time for the country, and certainly for Democrats, and by the way, for Republicans as well.

Americans are very concerned about the status of their economy, about the unemployment that exists. They were angry in '06, angry in '08 and they changed leaderships. They're angry in '10.

What we're going to focus on is not returning to the failed Bush policies that brought us to this point, but focus on the efforts that we have made which are making progress. We haven't succeeded yet, but we are making substantial progress. The economy is growing. We are creating jobs. And very frankly, we think that, when Americans assess, do we want to go back; do we want to, in fact, repeal the successes we've had and repeat the mistakes that we've made that got us to this point, I think they're going to say, no, they don't want to go back to the Bush policies?

CROWLEY: I mean, I know -- I realize that the Democrats have to go out, and that's what you've got to sell here, because you cannot sell a 9.5 percent unemployment rate. You cannot sell mortgage foreclosures at record levels. So you've got to say look, it's better than it might have been under these guys, and do you really want to go back? But...

HOYER: Candy, as importantly, though, you've got to say, and we need to make sure that it gets better, so that not only have we made progress but we need to do more to make sure that we bring that unemployment number down, that we grow the economy, that Americans can find jobs.

CROWLEY: Let me -- I want to show you something -- show our viewers something. It's an economic poll, actually, that CBS News did in early July.

And the question was, "How have Barack Obama's economic programs affected you personally?" Thirteen percent said, "They helped me personally." Twenty-three 23 percent said "Hurt." Sixty-three percent said "No effect."

So the entire 18 months, the past 18 months of stimulus plans, jobs plans, any number of things, and the vast majority of Americans say it either hurt them or had absolutely no affect. Why is that? HOYER: Well, for 63 percent of Americans who don't -- haven't lost their job -- and more than that, obviously, 90 percent -- but the fact of the matter is they have not seen a big change.

Interesting enough...

CROWLEY: And they -- but they've seen you spend the $1 trillion to try to fix it.

HOYER: Well, actually, we -- obviously, we had to invest to try to grow the economy, which every economist -- Mark Zandi, adviser to John McCain said, look -- and others, including Marty Feldstein, who was with the Reagan administration, said, if you don't replace the withdrawn consumer spending, we may well go into a depression, not a recession, and have unemployment exceeding what Ronald Reagan's was, in the 10.2 percent, 10.3 percent range.

Obviously, we had to, in the short term, invest to get the economy moving. In the long term, we obviously have to look at the debt. Americans are concerned about both growing the economy and making sure the debt does not put our country at risk.

CROWLEY: And one of the things that the president has asked you to do more recently has been the $50 billion job program, if you will. But you're having a little trouble with that. And isn't there -- you have said, look, we're just, like, we're in a spending fatigue at this point. It is very -- even though there are well-known economists saying you've got to spend more money because we're not out of it, Congress isn't in a mood to do that, are they?

HOYER: Congress is very concerned. Democrats are very concerned about the deficit. And that's why, frankly, we've taken some very substantial steps to overcome the deep deficits given to us by the Bush administration.

We've adopted pay-go, which simply says, look, we're going to pay for what we buy. Secondly, we -- the president -- when the Republicans in the Congress wouldn't support a deficit reduction commission that they originally proposed, and they didn't support, the president appointed one himself.

Mr. Bowles was mentioned previously by Mitch McConnell, and Senator Simpson are working together to try to, in the long term, bring this deficit down.

Thirdly, the president submitted a budget which freezes spending at last year's level.

HOYER: We've gone $7 billion better than that in the budget enforcement resolution we've adopted.

CROWLEY: Long story short, though, that $50 billion to keep teacher jobs, firefighters and the like -- that's not going to happen?

HOYER: We have passed, as you know, Candy, a jobs bill, a supplemental bill -- we've sent it to the Senate -- which would put $10 billion into making sure that we don't lose an overwhelming number of teachers, explode class sizes and, very frankly, put a lot of people...

CROWLEY: So the Defense authorization bill -- is that what you're talking about or is this separate?

HOYER: Well, part of the supplemental, but as you recall, in the House, we had not only the funding for the troops, which we're going to pass -- we need to do that -- but it also had some dollars to continue to try to make sure that we don't have more unemployment and lose teachers around the country.

The president's $50 billion clearly does not have the votes, but we clearly are focused on continuing to create jobs and grow the economy.

CROWLEY: Let me read you something in the sheer politics category. It's from Charles Krauthammer, who, if our viewers don't know, is a conservative columnist who wrote about the tensions between the House Democrats and the president.

(LAUGHTER) "For Obama, 2010 matters little. If Democrats lose control of one or both houses, Obama will probably have an easier time in 2012, just as Bill Clinton used Newt Gingrich and the Republicans as the foil for his 1996 re-election campaign."

And I've heard Democrats say something similar. Do you all feel that the president has not been out there enough for House members?

HOYER: No, you know, we had a very positive meeting with the president...

CROWLEY: OK, but we're not going to do kum-ba-yah; there's tension there, right? HOYER: There -- there's always tension. You pointed out earlier that there's always tension between the White House and the House and the Senate.

I pointed out that there was great tension between the Bush White House and the Republicans in the House of Representatives, and they were very nervous about his policies and what he was doing with the country, although they supported those policies, which, of course, got us to the point where we now are.

But my view is that the president and the Democrats in the House and the Democrats in the Senate have the same objective: keep this economy moving and growing; keep moving forward. We have a joint interest in the success of both. And the meeting that we had was a very positive one. And the president has been working hard. Joe Biden's been working hard on behalf of our candidates. And we think we're going to do well.

CROWLEY: One of the things that is, sort of, Politics 101 says that people, by the summer, have pretty much made up their mind how they feel their economy is going, and that that's probably not going to change between now and November. Assuming that's the case, how big a loss are we talking about for Democrats?

HOYER: I don't think we're talking about a big loss, Candy.

Let me look at three races for you, just to -- as specific examples. You can talk; you can speculate. After the last summer, which was a very hot summer politically, as you recall, we won a number of races during that period of time. Health care was a very hot topic. It was a very hot topic with Bill Owens and with Scott Murphy in New York. Bill Owens won a district in that context which we hadn't won in 158 years. Scott Murphy won a district when, again, health care was the number one issue.

You then move to Pennsylvania 12, and you see Mark Critz. The Republicans went after him with exactly the same arguments they're making today. What did Mark Critz say? "Look, I'm going to focus on building jobs, bringing jobs homes, making sure the economy is growing." And Mark Critz won. He didn't win by one or two points; he won by eight points. And that was, as you know, just a couple of months ago.

So we think that, when the real polls are taken, people look at these and say, do I want to return to the Bush policies, which created the worst economy we've seen in three quarters of a century, a time when it was said by economists, if you pursue those policies, worst depression could happen?

Or are they going to say, yes, we're -- we're angry; yes, we're fearful this economy is not doing what it ought to be doing? We agree with that. We've been working on that.

They elected Mark Critz handily, so that, in the elections that we have seen recently, in this time frame -- I don't mean years ago, but I mean in this special election time frame, we've won. CROWLEY: So hope springs eternal. Let me...

(LAUGHTER)

Let me turn you to one last subject, and that is, this week, lots of talk about the Tea Party. Now, that is where the passion is in politics these days, is inside the Tea Party, against a lot of big government spending, against big government in general.

Do you think that the Tea Party, as you know it to be, condones racism?

HOYER: I think there -- there are some members who have used the Tea Party -- whether it's the Tea Party itself, there are some individuals who have tried to exacerbate racial tensions in this country.

I have seen some virulent flyers that have been directed at our members, clearly referencing race, the president's race and race generally.

We saw in the paper today a billboard, which has now been taken down, which, in my opinion, went over the top. What we need to be doing is talking about the issues and solutions and what happened in the past to get us in the ditch that we're in.

If we do that, I think this will be a positive election. If we try to simply inflame differences and create division, I think that will not be positive. And I think that's, frankly, what some are doing.

CROWLEY: House Democratic Leader Steny Hoyer, thanks for joining us this morning. Appreciate it.

HOYER: Thanks so much, Candy. Always good to be with you.

CROWLEY: Thank you.

Next, inheriting a catastrophe. For the new mayor of New Orleans, the Gulf oil disaster is just one of many problems plaguing his city.

(COMMERCIAL BREAK)

CROWLEY: Mitch Landrieu's bad luck began shortly after his landslide victory for mayor of New Orleans in February. There was no honeymoon. The Deepwater Horizon oil rig exploded in the Gulf 13 days before his inauguration. His first official act was to talk to President Obama about the catastrophe.

Mayor Landrieu deployed booms and barges to keep the oil out of Lake Pontchartrain. That worked until last week, when the winds from Hurricane Alex bushed tar balls past the barrier.

The city is asking B.P. for $75 million for a marketing campaign to help lure back tourists, but New Orleans was in trouble long before oil began gushing up from the ocean floor.

(BEGIN VIDEO CLIP)

MAYOR MITCH LANDRIEU, D-NEW ORLEANS: Just as dramatic as the consequences of the B.P. oil spill are and continue to grow, so too are the dramatic consequences of this city's budget deficit. Like the spill, it's worse than we thought.

(END VIDEO CLIP)

CROWLEY: He entered office with a $67 million budget deficit, almost twice the amount Landrieu says he was led to expect by the previous administration. A series of budget cuts is under way.

The police department, struggling to right itself after decades of scandal and corruption, faces the brunt of the cuts. That means layoffs and overtime reductions. Other city departments have also seen overtime cut and projects canceled. It's not over. Landrieu is expected to announce additional cuts this week.

Plugging the oil leak is welcome news to New Orleans, but there are so many other things to do in a city that could use a little change of luck. Mayor Landrieu is up next.

(COMMERCIAL BREAK)

CROWLEY: You are looking at a live picture of the recently capped oil well in the Gulf of Mexico and some developing news. That well could stay closed until the relief well is drilled if pressure tests remain favorable. That's according to BP's operating officer, Doug Suttles. Now for more from the Gulf region, I am joined by the Democratic mayor of New Orleans, Mitch Landrieu.

Mr. Mayor, thank you so much for being here. We just got another piece of good news, and I know you are not used to good news, but have you sort of fully accepted that this might actually be the beginning of the end?

MAYOR MITCH LANDRIEU (D), NEW ORLEANS: Well, if it's true, it's obviously wonderful news. But we still have a very, very long way to go. You know, we have to stay focused on making sure that the well is capped. We then really have to aggressively capture the oil, clean the coast, make sure that all of the families, you know, are compensated, and then begin to restore the wetlands down here. So it is welcome news. It's the first piece that we've had a in long time. As everybody said, we're cautiously optimistic about it. But it's just a beginning. We have a very, very long way to go.

CROWLEY: I want to point out to our viewers and listeners that the noise they hear is the wind, we've caught you in the middle of a storm. What are the chances that would happen while we were doing this interview?

(LAUGHTER

LANDRIEU: It's par for the course, but it's OK. We'll figure it out.

CROWLEY: OK. Let me ask you if can you assess for your city what the impact has been of this oil spill?

LANDRIEU: Well, it's pretty significant. You know, as we talk about the jobs that are related to the oil and gas industry, the jobs that are related to the fishing industry, just the psychological damage that is done for us getting hit with another major catastrophe, you know, this is not our first one, we had Katrina and Rita, we had Ike and Gustav.

We actually had a significant downturn in economic fortune after September 11th, because we're a tourism industry. But this is a very resilient place. I think if the people of America don't know anything else about those of us that live in New Orleans and the coastal regions is, we're pretty tough. And we're going to find a way.

But it's a very difficult time. And, you know, we are going to make our way through this just like we made it through Katrina and Rita.

CROWLEY: You know, it's interesting to me, we have done a couple of stories on what you just talked about, the psychological impact of yet another catastrophe. How does that come to play? How do you see it as mayor of New Orleans?

LANDRIEU: Well, actually, it has consequences that you would expect. Sometimes people get really depressed about it, but other people really step up to the plate. We have to make sure though that we are moving in the right direction. And if we really cap that well, if we begin to capture the oil, if we really aggressively clean the coast up the way it's supposed to be, you make sure that everybody gets paid, we will begin to pull ourselves out of this.

So people down here are not ever asking for a handout. Nobody has ever asked that. This is our livelihood. This is the place that we live, it's our home. We think it's a very special place and part of America's soul. And so we are just going to keep going, one step at a time.

CROWLEY: I know you have asked BP for $75 million to help you sort of try to bring tourists back into the region. Have they been open to that suggestion? And what has been your general feel for how quickly they have been able to meet the claims of your constituents?

LANDRIEU: Well, let me say this, Ken Feinberg was down here later in this week. I think he is going to do a superb job. This was a guy that has got excellent credentials. To me he seems to be on his game, and we are going to continue to work with him and make sure that we put as much pressure as we can on him and everybody else to make sure that folks down here get compensated and our businesses get stood back up.

Getting money to folks early is much better than waiting late or because we are talking about an economic downturn that if it continues can get much worse, which is why we ask for the marketing money. We know because we are a fairly large tourism economy that if you spend money on the front end, you actually mitigate the damages on the back end.

Now BP really understands this because if you pick up any paper in America today, there are full page ads with BP talking about the work that they are doing down here. So I know they know that marketing works.

So it's critically important to get ahead of the game. When you're a convention city like we are, people are booking conventions years out. So we have to start working on that now. We think it's a really important preventive measure. And if we get that in place, we are going to be able to mitigate and minimize the damages that we have years out. So I hope they say yes. I am still waiting for them.

CROWLEY: Let me talk a little bit about the moratorium on deep- water oil drilling and that impact. Because I know, even as you want to clean up the environment, that is a huge source of income for so many people in your city. Have you talked to the president about this, and about the need to have that start early, or do you agree with the moratorium?

LANDRIEU: Well, no, I don't agree with the moratorium. And I have talked to the president about it. You know, if you look at this from a distance and you look at it as a matter of philosophy, maybe it's arguable. But the fact of the matter is that folks down on the coast, the families that fish and the families that work in the oil and gas industry are the same families.

And so that really adds insult to injury. Those of us down here obviously are as interested or are more interested in safety than anybody else in the country. But we believe that there is a way to drill safely. And you can handle the moratorium with a scalpel and not a hammer.

So we're in continued communications with Secretary Salazar and the president's office to modulate that moratorium, because, again, once those rigs leave, they are not leaving just for six months, they will leave for years. And that is going to have a devastating impact on the other side of it.

We have to find a way to drill safely. I mean, people in this nation consume 20 million barrels of oil a day, but we only produce 8 million. So unless we're going to stop producing oil or people are going to quit driving, which nobody in America has really kind of seen the need to do, they we have to find a way to do both of these at the same time.

CROWLEY: Do you have any reason to believe from your conversations with the president that they might be acting more speedily on lifting the moratorium?

LANDRIEU: Well, I know they are working hard on it. The commission was down here the other day. We continue to have communications about it to do this in a way that actually makes sure the drilling is safe, but it actually gets people back to work very quickly. And like our conversations with BP, we will continue to work with the White House.

They have had folks down here continually, and we are just going to keep hammering away at it until we get this right. There is no easy answer to this problem. There is no way to make it sound like it's good. It is a very difficult, complicated problem that hurt a lot of people.

But I want the nation to stay focused, cap the well, capture the oil, clean up the coast, compensate everybody, and then let's start working hard restore the coastal wetlands of Louisiana, which provide 30 to 40 percent of the nation's fisheries, 30-40 percent of the nation's -- this is a national security and an economic security issue for the country.

It's not just about helping a bunch of folks that got hurt. This is really an American issue that deserves a really robust American response. And we are going to keep working at it until we get it right.

CROWLEY: And, finally, Mr. Mayor, I want ask you about your governor. As you know, he has gotten a good deal of attention during this particular crisis. He has been praised for being a strong leader of the state, for standing up to the federal government. He has also been criticized by some saying who say he is showboating for the national cameras because wants a national career.

The latest criticism comes from Len Bahr, who is the former director of the Louisiana Office of Coastal Activities. And he told The New Orleans Times-Picayune: "Everybody loves the idea of piling up rocks and sand," one of the ideas of Governor Jindal, "but it's a dumb thing to do from a scientific standpoint. In 18 years in the governor's office, I have never seen an administration where science is such an alien concept."

Give me your assessment of how you think Governor Jindal has done handling this crisis?

LANDRIEU: Well, let me say this. This, as a lieutenant governor, I have sat next to two governors that handled crisis, so this is my fifth one. And one of the things that we get pulled apart on is criticizing the president, whether it's Bush or Obama for not getting down here, or the governor for doing this. That's all Washington parlor talk.

We need to just stay focused on what has to happen. Everybody has been working hard. Some people make missteps, some people don't. It's hard to get this perfect. I mean, this is a catastrophe of epic proportions. Spending a lot of time on those kinds of discussions of where the president is going on vacation, takes our focus off of the thing, which is really easy, cap the well, capture the oil, clean the coast, compensate everybody, restore the coastal wetlands, and get back to work.

Anything other than -- outside of that, those four or five issues to me is just noise.

CROWLEY: Then that's where we will leave it. Mayor of New Orleans, Mitch Landrieu, thank you so much for joining us today.

LANDRIEU: Great. Thanks for having us. Appreciate it.

CROWLEY: Just ahead, a check of the top stories and then some deep sea pictures very different from what we've been seeing in the Gulf.

(COMMERCIAL BREAK)

CROWLEY: Time for a check of today's top stories.

Secretary of State Hillary Clinton has arrived in Pakistan to bolster the relationship with a major ally in the war on terror. She is expected to emphasize the need for better partnership between Pakistan and Afghanistan to help battle insurgents in tribal regions along the two countries' borders. Clinton is also presenting Pakistan's government with the first $500 million of a new $7.5 billion aid package. After her Pakistan visit, Clinton is scheduled to attend an international conference in Afghanistan and visit South Korea and Vietnam.

A suicide bomb attack in Afghanistan's capital killed three people and left 40 others injured today. Police say the attacker was on foot and did not appear to have a specific target. Afghan president Hamid Karzai condemned the attack and ordered officials to improve security in Kabul.

Another suicide bombing outside Baghdad killed at least 43 people and left 40 others wounded. Iraqi police say the attacker targeted members of the Awakening Council, former Sunni members who now back the government as they waited to receive paychecks. Awakening council members are credited with helping decrease violence in Iraq over the past two years. They are frequent targets of anti-government militants.

And the world is celebrating the first international day in honor of Nelson Mandela as he turns 92 years old. Leaders and ordinary people around the world have committed to devoting 67 minutes of their time to community service to mark the number of years Mandela has spent in politics. In a statement released by the White House, President Obama wished Mandela a happy birthday and praised his vision, leadership and spirit. Mandela spent 27 years in jail for resisting South Africa -- South Africa's apartheid rule. He became the country's first black president in 1994.

Those are your top stories here on "State of the Union."

Up next, continents away from the Gulf oil disaster, a vastly different picture of underwater life.

(COMMERCIAL BREAK) CROWLEY: Finally, being able to watch live pictures of oil belching into the Gulf of Mexico a mile beneath the water has been both amazing and appalling.

We end today with deepwater exploration of a different sort, Australian scientists with remote cameras a mile beneath the Great Barrier Reef. And these pictures are just amazing.

Specially designed low-light cameras crept along the ocean floor for 10 days, recording a number of previously unidentified species, pictures into the mystery of the deep.

Sunlight does not reach here. Some of the fish produce their own light, like a firefly in the ocean. Because food is so sparse, some feed only once or twice a year and move slowly to conserve energy.

There is still much to be learned from the depths. One American oceanographer told CNN, "We've seen more of the moon than the deep sea."

The lead researcher in Australia says that cameras will be sent to the Gulf of Mexico to monitor the effects of oil on marine life.

Thanks for watching "State of the Union." I'm Candy Crowley in Washington.